Telcom firms must pay for spectrum beyond 6.2 MHz: DoT to EGoM

NEW DELHI: The telecom department has told the P Chidambaram headed panel of ministers that incumbent GSM operators must pay for excess spectrum they hold beyond the 6.2 MHz limit, irrespective of whatever methodology or option the government chooses to impose a one-time airwave charge on existing mobile phone companies.

As per DoT's calculations, incumbents such as Bharti, Idea and Vodafone must shell out a minimum of Rs 22,640 crore if the Empowered Group of Ministers on spectrum endorses its stance in the October 8 meet. But these companies will have to shell out a far higher amount if the panel of ministers decides to ask incumbent operators to pay the auction-determined price for all the airwaves they currently hold, or for spectrum above the 4.4 MHz mark.

"In all options, excess spectrum (above 6.2 MHz) to be charged," the DoT said in presentation to the EGoM on October 3. ET reviewed a copy of the department's presentation.

On Wednesday, the inter-ministerial panel failed to decide if incumbent operators should pay the auction-determined price for the airwaves they currently hold.

The DoT had presented three different options to this panel of ministers — to impose a one-time fee prospectively on all airwaves held by existing telcos; to levy this fee on airwaves held beyond the start-up spectrum of 4.4 MHz; or to levy this fee on airwaves held beyond the contracted spectrum of 6.2 MHz.

The DoT in its October 3 presentation has also told the panel of ministers that the first option will fetch the government about Rs 72,792 crore, while charging for airwaves beyond 4.4 MHz at the upcoming auction determined price will bring in over Rs 50,000 crore (this includes the Rs 22,640 crore for excess airwaves beyond 6.2 MHz).

While the DoT has presented three options to the EGoM, it is learnt that the department is not in favour of imposing this one-time fee prospectively on all airwaves held by existing telcos. The DoT wants the EGoM to take a call on charging this fee for all airwaves beyond 4.4 MHz after receiving the opinion of the attorney general, the highest law official in the country.

The department is, however, firm on the one-time fee being imposed prospectively for all excess airwaves beyond the contracted limit of 6.2 MHz.

During Wednesday's meet, the EGoM also endorsed the proposal to charge telcos 9.75 per cent interest annually if they choose to make staggered payment for airwaves secured in the upcoming auctions.

Telcos will have to shell out only 33 per cent upfront for GSM airwaves in the 1800 MHz band, and 25 per cent for airwaves in the 800 MHz band, largely used for CDMA services, while the rest can be paid in ten equal installments, after a two year moratorium. Put simply, the company can pay for 2G spectrum it secures in the upcoming auctions scheduled to begin next month, over a 12-year period.

But the EGoM has also decided that moratorium will only be extended to those whose permits are valid for more than 15 years, and this will be reduced to a single year if the balance period of the licence is between 10-15 years.